Posted on June 01, 2005 at 16:39:36:
The standard mileage rate used to deduct business driving has risen to 40.5 cents a mile, up from 37.5 cents. In addition, the “bonus” depreciation for new cars is gone; a big item in the actual expense method is worth less. That means using the standard mileage rate is more attractive than ever.
There are some rules: if you own the car, use the standard mileage rate the first year the car is used for business. After that, you can choose whichever method is more advantageous. But if you start using the actual expense method, you can’t switch. If the vehicle is leased, you can use the mileage rate only if you use it for the entire lease term. And a business can’t use the standard mileage rate if it operates five or more cars at the same time.
Even if you use the standard mileage rate, you can also deduct the parking and tolls related to business use of the car. And a self-employed person can also deduct interest on a car loan.